Editor’s Note: Brett Knights is Chief Operating Officer (COO) of SafeGuard World International’s Global Managed Payroll. He is a payroll leader with more than 19 years of experience in global, executive, and leadership roles. His career has been focused on the delivery of HR and payroll services in business process outsourcing and shared service environments. Brett has worked for multiple global payroll suppliers, both domestically and globally, including running global payroll operations for a large technology company. The company paid more than 290,000 employees in 95 countries every payday. Today, Brett leads more than 350 team members in implementation, payroll processing, and ongoing service delivery to 250-plus clients across more than 175 countries. With regional service operations in the United States, Mexico, Budapest, U.K., and India, Brett enjoys engaging with a highly diverse and multicultural workforce.
How is the changing role of the global payroll professional—typified by greater interaction with the human resources (HR) department, data analysis, and strategic planning—making an impact in the field?
Global payroll professionals have always been required to establish tight relationships with HR and finance departments to ensure accurate, compliant, and timely delivery of payroll to the company’s greatest assets—its employees. The payroll data managed by global payroll professionals can become a critical and integral part of strategic business planning.
For example, let’s assume the business is planning a substantial expansion in the coming year. It wants to assess which of its current locations has the best cost in terms of labor (for both employer and employee-related costs) and how those costs have changed over a period of time. Global payroll professionals can use their data to produce reports showing comparative analysis across countries and how those costs have increased or decreased over a specified time period, helping HR and finance make more precise decisions. Because the data contains many HR elements, it can be broken down many ways including by role, department, tenure, etc.
In addition to assisting with analytical data, global payroll professionals are increasingly being asked to improve the employee experience when managing payroll changes and related inquiries. On a global scale, this may include self-service delivery, multilingual capability, inquiry management tracking, and access to localized expertise to understand common payroll practices and compliance requirements.
What are the emerging trends or issues that have your attention in global payroll?
Companies are looking to be more transparent and have control over their global payroll data to ensure compliance while being able to utilize payroll analytics in business planning. For many companies, this includes:
- Centralization of more payroll services within global or regional shared service centers to reduce payroll costs and increase efficiency
- Reduction in the number of systems and/or suppliers
- Harmonization of data and pay practices
- Increased automation to reduce manual tasks and rework
How would you advise someone whose company is just beginning to expand to a global payroll with regard to risk management and compliance?
It is critically important to understand that statutory and compliance requirements vary greatly across the globe. Failure to know and adhere to these requiremtns can have a significant impact on your company’s business reputation within these regulatory agencies and can inhibit your ability to establish and grow in those locations.
Equally important, there are often variations in play where practices may differ based on cultures and local customs within a country. Failure to offer similar pay structures for your localized employees can make it difficult to attract and retain competent resources for your business.
Both of these areas can be overcome by ensuring you have access to a partner to help provide the insight, guidance, and consulting necessary to identify strategies as you enter these markets to meet these requirements in advance and avoid early missteps.
How can a global payroll department integrate on a strategic level with corporate finance, HR, and other departments to provide a competitive advantage?
Global payroll departments can act as an important source of data and related analytics for HR, finance, and even department-level management to assist them in understanding some of their most significant operating costs—their employees. Global payroll can show trends in salary costs, employer costs, benefit and social programs, and various pay programs. These can be compared across locations to help business managers understand the impact of hiring in various geographies and how those factors have changed over time.
Is it possible to have a single global payroll solution and service?
This is a question of great debate among many of the global service providers. Today, there are approximately 189-196 countries in the world (depending on the source). Within each of these countries, there are differing rules related to labor, taxation, and compliance that can have a direct impact on payroll. While there are some similarities among payroll concepts across countries, the actual rule sets required to comply with each country’s regulations and requirements vary widely. Even within a country, these can vary at the state, province, city, or local levels. Because of the vast number of countries and variations of payroll requirements within each, the development, delivery, and ongoing maintenance of a single system becomes incredibly difficult to achieve. Aggregator solutions allow global payroll data from multiple systems to be harmonized in a central repository. This provides most of the direct benefits of a single global payroll solution and service.
What are the biggest challenges for global payroll teams?
Even domestic payroll delivery can be a challenge. But when delivering global payroll services through centralized or regionalized teams, unique considerations must be taken into account such as:
- Multilingual capabilities—Local language requirements often arise when managing inquiries from employees, or when reviewing payroll-related documents from statutory agencies. Having access to team members who can communicate and/or translate this information is beneficial.
- Time zone differences—Adherence to strict timelines and cutoffs for payroll schedules is a requirement to ensure timely delivery of funds to employees. When working across geographic boundaries, global payroll team members must have full visibility and plan for time zone differences as well as holiday schedules for each country.
- Cultural differences—Working with diverse populations across the globe is both exciting and challenging. It is important to ensure full knowledge and understanding of the cultural expectations, local needs, and common experiences related to payroll delivery in the countries you serve.
- Think globally, act locally—While each country has unique requirements, it is important to leverage best practices that can drive consistency and standardization across more than one country wherever possible. This helps your global payroll team achieve efficient and consistent service delivery to your employees while also controlling payroll costs.
What countries are the most complex for global payroll and how do you prepare for them?
Delivering accurate, timely, and legally compliant payroll services in every country can be an ongoing challenge. Countries, provinces, cities, and local townships are constantly evaluating and changing statutory requirements that often impact multiple groups (HR, finance, and payroll). Therefore, countries that are less complex today can rapidly become more complex over time.
Another factor to consider is the type of industry your company is part of, which can have an impact on payroll country complexity as well. Manufacturing-related companies tend to have collective bargaining or labor union agreements that impact payroll requirements beyond the local statutory requirements in a country.
While there is likely to be much debate about which countries are the most complex, I believe these five countries rank highly: 1) United States; 2) Japan; 3) Brazil; 4) Italy; and 5) France.
While a country like the United States may have complex payroll requirements, it also has robust systems and services available within the country to support them. Other countries, like Brazil, are complex and constantly changing while the available systems and services in the country have struggled to consistently align to the changing requirements.
Prior to providing payroll services, it is important to speak with knowledgeable country experts to understand the following areas:
- Establishment requirements of the business entity or entities and the related organizational structure as required by local employment law
- Statutory and compliance requirements and how they may have changed in the last two to three years
- Payroll-related filings and deadlines
- Common or customary pay practices according to the country and the industry or industries you serve
How is technology helping global payroll become more strategic?
Technology platforms have become more efficient in sharing data across systems, standardizing, and harmonizing data across these environments, and producing analytical data through supporting tools. Since payroll data is often a compilation of data from multiple sources (HR, finance, third-party providers, etc.), it is a rich source of information that is critical to strategic business decisions. Global payroll professionals need to ensure they can review and identify analytics results and related trends within the data to share with other departments—assisting in decision-making.
What wisdom can you share in regard to being effective, efficient, and legally compliant in the sphere of working in global payroll?
The single biggest factor affecting the effectiveness, efficiency, and compliance of a company’s payroll is data. Data related to payroll is generally sourced from multiple systems and inputs across a company. Many of these inputs and sources may not have been designed with payroll requirements in mind. Therefore, partnering with the system stakeholders to understand how to improve the quality and timeliness of data initially being received by payroll is critical to the payroll team achieving successful results. Ensuring accurate and timely data at the source means less rework or corrections within the payroll team during or after the payroll process.
What kinds of training and education would be most useful for someone moving from domestic to global payroll?
Globalization of payroll services is still a relatively new phenomenon in the payroll world. Therefore, many of the sources of information for training and education on global payroll are new and still evolving. For that reason, it is important to leverage multiple sources for global payroll knowledge. I highly recommend that global payroll professionals begin by networking with other industry professionals through payroll-related events and/or social networking groups such as LinkedIn. These activities provide a method to interact with experienced people to identify best practices or lessons learned. Beyond the professional networking, connect and subscribe with sources of information and training from your suppliers and industry experts such as the Global Payroll Management Institute (GPMI) and the Global Payroll Association. Lastly, be sure to maintain visibility with local, in-country resources for legislative and compliance changes by signing up for notifications and information.
What are some of the unique aspects of running an efficient and effective global payroll operation?
To be an efficient and effective global payroll operation, you should focus on the following areas:
- Define effective payroll policies, practices, and service-level agreements with internal stakeholders—These should have clearly defined payroll policies, including exception-based processing rules and related timing, which can ensure that team members plan for payroll events and related work activities for payroll. Service-level agreements allow you to establish governance and measurements related to payroll service delivery requirements within your company.
- Map flow and quality of data—Within a global environment, your payroll data can arrive from many sources that may have different rules and levels of quality. It is important to map these sources, understand what controls are applied prior to receipt of data, and determine additional compensating controls that the payroll team needs to apply.
- Standardize and automate whenever possible—By having a repeatable and consistent approach to doing a task, you reduce risk and ensure scalability. Once a process is standardized, it is easier to automate one or more elements of it. Automation also can allow tasks to be performed after hours or during non-peak periods to balance workloads. The more standardized and automated your delivery becomes, the more efficient and effective your team will be.
- Adhere to schedules and related timings—The functions of global payroll operations often span across multiple countries and time zones for end-to-end delivery. It is imperative to understand how time zone differences, holiday schedules, and geographical staffing models can have a positive or negative impact on payroll delivery efficiency and effectiveness.